BLBG:Asian Stocks, Oil Slump On China Concern; Europe Futures Rise
Asian stocks fell, extending the steepest monthly slide since 2008, and oil slumped after Chinese manufacturing slowed before U.S. payrolls data today. The Dollar Index (DXY) climbed to its highest level since 2010 and European equity futures rose.
The MSCI Asia Pacific Index dropped 0.9 percent as of 0.9 percent a.m. in London. Futures on the Euro Stoxx 50 Index gained 0.4 percent after the equity gauge dropped to a one-week low yesterday. Contracts on the Standard & Poor’s 500 Index lost 0.5 percent. Crude oil sank 0.3 percent in New York, the fourth day of declines. The Dollar Index gained 0.2 percent.
A Chinese purchasing managers’ index showed manufacturing grew less than estimated last month. U.S. non-farm payrolls probably climbed by 150,000 workers in May, according to the median forecast of economists surveyed by Bloomberg News. Data yesterday showed the U.S. economy, the world’s biggest, expanded less than initially estimated in the first quarter.
“The global economy, centered in the U.S. and China, is facing stronger headwinds than expected, and recovery expectations are tapering off a bit,” said Kiyoshi Ishigane, a Tokyo-based senior strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $70 billion.
Treasuries headed for their steepest weekly gain in 2012 as investors became more risk averse amid signs of slowing growth in the world’s two-biggest economies and a deepening crisis in Europe. Ten-year yields rose 1 basis point to 1.57 percent, after falling to a record low yesterday.
The MSCI Asia Pacific Index dropped for a third day, led by resources companies. The gauge sank 10 percent in May, the biggest monthly slump since October 2008, dragging valuations to 11.5 times estimated profit, the lowest level since October. World stock markets lost more than $4 trillion last month.
Manufacturing Slowdown
Taiwan Semiconductor Manufacturing Co., Honda Motor Co. and Canon Inc. slid more than 2 percent, contributing the most to the drop in MSCI’s Asian gauge. DeNA Co., an online gaming company, fell 9.4 percent in Tokyo after Ichiyoshi Research Institute downgraded the stock. Rival Gree Inc. slid 10 percent, leading declines in MSCI gauge.
China’s manufacturing Purchasing Managers’ Index was 50.4 in May, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today. The reading compares with the 52.0 median estimate in a Bloomberg News survey of 27 economists and 53.3 in April. A reading above 50 indicates expansion.
‘Wiggle Room’
“The weaker-than-expected Chinese data is hurting sentiment,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $27 billion. The slowdown in China and the U.S. “will give policy makers more wiggle room to stimulate their economies,” he said.
Leaders of Italy and the European Central Bank yesterday pushed Germany to give up its opposition to direct euro-area aid for struggling banks, while Spanish bond yields rose to levels near those that prompted other nations to seek bailouts.
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, climbed last month by the most since September as investors sought refuge in U.S. assets.
“The big issue is how Europe is going to play out,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “You have to have a fairly cautious attitude toward adding risk to your portfolio.”
Oil futures traded at their lowest levels since October on speculation slowing Chinese growth will reduce fuel demand as supplies rise. Crude for July delivery declined 0.3 percent to $86.29 a barrel in New York.
The cost of insuring bonds from default rose in Asia, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 3 basis points to 200, according to prices quoted by Royal Bank of Scotland Group Plc. The index is headed for its highest close since May 23, according to CMA, which compiles prices quoted by dealers in the privately negotiated market.
To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
